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Building Permit Picture Shows Construction’s Comeback Is Moving Slowly

The story of San Diego County construction activity, measured in building permit valuations for new projects, has been consistent throughout 2010. This year has been better than 2009, but overall construction is still 50 percent below what was seen here just three years ago — and down two-thirds from 2006.

The latest numbers from the Construction Industry Research Board support a narrative that’s become familiar in recent months, with local residential building getting up slowly off the mat, while commercial construction remains down for the count.

The county had just over $774.9 million worth of permits pulled for residential projects, including new homes and apartments as well as renovations, in the first nine months of 2010. That was up 14.1 percent from the same period of 2009.

Commercial projects — new office, industrial, retail and hotel buildings, in addition to renovations — came in at just over $473.1 million, down 1.3 percent from a year ago.

With the two categories combined, the building permit value of just over $1.24 billion was up 7.7 percent from a year ago for the first nine months. But it was less than half the $2.57 billion seen in the same period of 2007.

By category, the patterns are a mixed bag on the commercial side. Industrial construction so far this year is down 66 percent from a year ago, to $6.5 million, and office building is down 20 percent, to $13.5 million.

Retail building is actually up 73 percent, to $29.8 million. But that number is down two-thirds from the first nine months of 2008 — the period just before shoppers closed their wallets and retailers put building plans on hold.

Local hotel construction in 2010 is up 5 percent from a year ago, to just over $3.9 million in building activity. But that’s less than a tenth of the $40.8 million in hotel construction seen in the same period of 2008.

• • •

CCDC Proposes Application Fees: Centre City Development Corp., San Diego’s downtown redevelopment agency, is recommending that the city enact new application fees, aimed at helping the agency recover costs for processing development and land-use applications.

The agency’s board of directors on Oct. 27 approved a schedule of fees that would be phased in over a five-year period. The fees will be reviewed next by a San Diego City Council committee.

The fees cover 24 situations relating to applications on downtown development projects. They range from $100 for filing an appeal with the agency, to $23,676 for a site development permit involving historic resources.

Certain types of development would be exempt from the new fees, including affordable housing projects that receive redevelopment agency funds and social services projects.

• • •

Another Apartment Complex Changes Hands: Mariners Village Apartments, a 172-unit complex in San Diego’s Paradise Hills neighborhood, has been purchased for $31.5 million by the San Diego Housing Commission.

It’s among the latest in a string of large local apartment properties getting new owners, in what has been a strong second half of 2010 for the multifamily property investment market.

The seller in the transaction was Mariners Investors Inc., with Continental American Properties Ltd. as its managing partner, according to the brokerage firm Cassidy Turley BRE Commercial, which represented the buyer.

The housing commission is known to be working with brokerage firms, including Cassidy Turley BRE and CB Richard Ellis, to acquire additional properties in the local market.

• • •

REIT Reports Third-Quarter Numbers: Escondido-based Realty Income Corp., a real estate investment firm focused on retail and related commercial properties, posted revenue of $87.2 million and net income of $25.6 million for its third quarter ending Sept. 30.

Revenue was up 7 percent and net income was down 5.5 percent from the same period of 2009, the company announced Oct. 27.

For the first nine months of the year, revenue rose 3.6 percent from 2009, to $253.2 million. Net income available to common stockholders was $74.7 million, a decline of 3.7 percent in the same year-ago period.

Realty Income trades on the New York Stock Exchange under the symbol O.

Send commercial real estate and development news of general local interest to Lou Hirsh via e-mail at lhirsh@sdbj.com. He can be reached at 858-277-8904.

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